Consultant says firms citing capacity issues and risk for not working up bids on some schemes
T&T Alinea has warned that contractors’ willingness to price jobs should not be taken for granted because of capacity issues and reluctance to take on high-risk work.
The cost consultant, in its latest report on the London market, said firms looking to work up bids for jobs is “not guaranteed…even when output is low”.
It added: “The administration of some key contractors has tightened certain markets, particularly in specialised sectors, and the remaining firms are more selective with tenders or contract terms.”
And it said as pipelines recover, labour shortages, experienced site-based staff leaving the industry and a constrained contracting market “will act as the primary constraint on growth and delivery”.
It said that jobs were being delayed with “the pipeline of work expected in the middle of 2026 is now more likely to occur later in the year and 2027”.
It added: “Pricing generally remains competitive, although certain active markets, such as data centres, continue to influence packages such as mechanical, electrical and plumbing.
“There is available capacity for work, especially amongst early trades, but the more protective approach to risk and terms and conditions that has become embedded in the market in recent years means that even if workloads decrease, little reduction in pricing is expected.
“Both the contractor and consultant markets are displaying a general sense of caution. However, the uncertainty resulting from the conflict in the Middle East is not having as significant an effect as the invasion of Ukraine did in 2022.
“The market has not been fully impacted, in part because some trades have absorbed price increases rather than passing them on. This is not sustainable, however, and underlines the fragility of both pipeline and overall project viability. If the conflict persists, the likelihood that price increases will be passed on.”
T&T Alinea said that for now it was holding its existing tender price forecast of 3.5% this year and next.
Meanwhile, London QS Exigere said it was expecting tender price inflation for MEP to be at an average of 4.35% this year.
In its latest quarterly report on the sector, it added: “This is a more manageable position than the hyperinflation seen in 2024 and 2025, although geopolitical uncertainty, labour shortages and specialist package constraints continue to create risk.”
Exigere said MEP firms were forecasting a 14% increase in turnover this year with growth being driven by data centre work as well decarbonisation and life sciences projects.
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